Federal Reserve Governor Christopher Waller said stablecoins have the potential to “maintain and extend” the international role of the dollar, though their rise or fall will depend on solid business use cases and a harmonized set of rules.
“The stablecoin market would benefit from a US regulatory and supervisory framework that addresses stablecoin risks directly, fully and narrowly,” Waller said in prepared remarks for a conference in San Francisco. “This framework should allow both non-banks and banks to issue regulated stablecoins and should consider the effects of regulation on the payments landscape.”
Waller noted that stablecoins are subject to run risk.
Stablecoins are digital tokens intended to hold a steady value. Issuers typically promise to hold liquid assets, such as dollars or Treasury bills, in equal value to tokens created. Stablecoins could be backed by any currency, but are commonly backed by US dollars.
“The emergence of different global stablecoin regulatory regimes creates the potential for conflicting regulation domestically and internationally,” Waller said. “This regulatory fragmentation could make it difficult for US dollar stablecoin issuers to operate at a global scale.”
Waller noted state regulators have been “key players” in the development of the stablecoin market, and several states are in the process of developing laws or finalizing new regulations. “There is a risk that state regulations may conflict, which could prevent the use of the same stablecoin across all states and reduce stablecoin scalability.”
Source: Bloomberg
